1 Introduction

Checkpoint is a US based manufacturer and marketer of IT solutions and services for retail
security, labelling and merchandising applications in all continents excluding Africa. Its
products and applications help retailers and manufacturers to optimise their operations by
branding, tracking and securing goods. Although Checkpoint’s operations are global based
but Europe is its main centre for operating and its 50% workforce is based in Europe only.

In 90’s decade Checkpoint entered into Europe by acquiring big brands in native countries.
Like million other companies in 1999 Checkpoint was facing Y2K obstacle in its progress and
its IT infrastructure was not Y2K compliant. Therefore Checkpoint decided to implement
new ERP (Enterprise Resource Planning) platform to streamline and optimise its growth
strategies.

This report mulls over integration issues and legal aspects for implementing SAP ERP
systems and affects of these implementations on Staff roles within Checkpoint system.

2 Effect of ameliorated IT system on staff roles

Checkpoint’s implementation of new IT systems affects its 1600 European employees in
certain ways:-

2.1 Dealing with Complexities

Checkpoint’s staff had to deal with several tedious and complex tasks, like the consolidation
of local data extracts into Microsoft excel as there were language structure differences.
Staffs were confused over the sequence of order as it was in different language. Moreover
financial consolidation was not at all easy, as the process was time consuming and was
prone to errors.

2.2 Retraining of staff.

Checkpoint’s management failed in benchmarking operations and divisions of different

countries against each other. It was difficult to determine backlogs and sales levels by
country because staffs was unable to share their knowledge across borders due to different
skills sets, As some were experts in packaged solutions such as Baan, JD Edwards and
Exchequer and some could make custom-built applications on PC based platforms.
Therefore management reporting was very costly and time consuming. Moreover they could
not be transferred to different subsidiaries for creating a central platform and Checkpoint
had to retrain them for transferring them to different subsidiaries and for benchmarking
operating and divisions of different countries.

2.3 Employment of local SAP experts in all countries.

Checkpoint had to install SAP for centralising its operations in Barcelona and Bratislava. As
the SAP was to install at all regional centres but Checkpoint had employed only a central
implementation skills. The implementation team could not understand business terms of
SAP ERP applications as the international team was short of local language skills. This
created an employment opportunity for local SAP experts and they were hired to fill the skill
gap and to overcome the language barrier.
2.4 Reassignment of staff

In moving to a centralised system, Checkpoint had to eliminate local applications and the IT,
accounting and management staff who used to manage local applications and operations
was reassigned to shared service centres in Barcelona and Bratislava.

2.5 Increase of work load

The no of tasks which each employee use to process at local centres were increased and this
resulted in higher efficiency and high automation of business process resulted in increase in
business efficiencies and activities.

2.6 Proficiency achievement after centralisation

After centralisation management and staff of checkpoint gained proficiency in several tasks.
Due to common set of standards, processes and applications, management could
benchmark countries to compare costs as one common chart of account was used in
Europe. Management can now get feedback from customers via SAP at a common platform
and reports at European level could be accessed.

Management could now connect to all customers, suppliers and other units via EDI
(Electronic data exchange) connections.

2.7 Overcoming resistance to change management

For the purpose of centralising operations the human resource had to shuffle all the
employees and management on the basis of their abilities and work needs. Generally
employees are resistive to change management process but subsequent investment in end
user training to overcome cultural barriers and resistance to reassignment worked well for
Checkpoint.

3 Integration issues for SAP ERP with other systems

Checkpoint faced several Integration issues while implementing SAP ERP with other
systems. The issues as explored in case study are described below.

3.1 Financial Consolidation

Management faced several problems in financial consolidation as it was time consuming and
was more prone to errors. This was more prone to errors as due to language difference of
new databases and old databases and it was tedious to know the order information and
moreover it was a manual process as local data extracts were consolidated in Microsoft
Excel.

3.2 Cultural and Different skills Issues

Management faced several issues while reporting the current backlog, sales level by country
as this was very costly and time consuming effort. There were certain barriers to this like in
share of information across borders, language and technical skills gap. Moreover some
professional were expert in packaged solutions and some were in custom built applications.
Management had to retrain the staff for overcoming these issues.
3.3 Duplication Issues

The applications and databases were to duplicate in order to manage them at a central
platform. But this come as a tedious issue to management as all countries had different IT
applications; they had different links with third party logistics and services providers.
Therefore, for a centralised platform management had to create those links again from a
central platform with suppliers and customers via EDI.

3.4 Compliant with Sarbanes-Oxley Act.

Checkpoint had to review its accounting practices for complaisant with Sarbanes Oxley act in
order to implement SAP ERP. After reviewing this act, it faced low cost competition from
emerging market vendors.

3.5 Skills Gap Issues

Checkpoint created a centralised team for implementing SAP ERP but this team faced
several difficulties in understanding business terms of SAP, as those were in local languages
and internal team of SAP could not understand that, so they had to hire local SAP experts.

3.6 Data cleansing efforts

In a spree of centralising all the databases and applications, Checkpoint had to cleanse
customer master and material master data, remove errors and to eliminate duplicate data
in order to create upgraded data bases with implementation of SAP ERP.

3.7 Customer Orientation

After implementing SAP ERP, checkpoint had to deal with customers of different countries
from a local platform, as before centralisations, customers were connected to the
checkpoint via local EDI links in several countries but after centralisation Checkpoint had to
establish all the links again via EDI and this was very complex issue for Checkpoint. As the
entire customer information was stored in databases and was highly technical task to merge
the data and to store all local data at one MPC Ecommerce database.

4. Legal Aspects of using IS within Checkpoint systems.

The legal aspects which can arise in implementation of Information systems within
Checkpoint Systems are explored using existing literature and exploring some cases
available on the internet. Nowadays it is really important to consider legal and social aspects
of applications when they provide certainty.[ CITATION IKa05 \l 2057 ].

US corporate government passed a Sarbanes-Oxley Act in 2002 according to which

Checkpoint had to review its accounting practices and management focussed on importance
of assessing, maintaining and developing an effective control system.

Checkpoint has to comply with this act to stay away from high profile financial frauds and
bankruptcies.

According to a research by Price Water Cooper House, Checkpoint has to be legally

responsible for:-
  To evaluate, monitor and establish internal control effectiveness over disclosure and
financial reports.
 Checkpoint’s management had to disclose the facts to audit committee and external
auditor if there are any significant deficiencies and material weaknesses in financial
reporting.
 To report the “disclosure controls and procedures” of financial reporting and to
establish the “disclosure controls and procedures”.
[ CITATION KKe04 \l 2057 ]

The Sarbanes-Oxley Act helps Checkpoint systems to prevent intentional acts which include
fraud and sabotage and unintentional acts which include errors caused by human
carelessness, logical errors and misplaced data which in the end could harm customers
economically or generally.[ CITATION UGe05 \l 2057 ]. The central internal control system has
to focus on mitigating these threats.

Checkpoints’ at a central platform also manages transaction between different countries

which can be business to business or business to customer, but due to different in currency
exchange rates it has to follow a regulation while adhering to Sarbanes Oxley act. During
transaction, ERP SAP refers to its own currency exchange rates and the rates are also
entered manually, but exchange rates changes transaction instantaneously, so to prevent
any error a maximum exchange rate difference (tolerable percentage) which can inform the
client for intolerable differences between entered rates and stored rates in table. In this way
by complying with Sarbanes Oxley Act, Checkpoint prevents any internal errors in
transactions.[ CITATION Pal06 \l 2057 ].

Controlling changes in the system is also a legal aspect of Information systems in

Checkpoints systems. The predefined reports are executed in order to monitor changes to
master data in the system. The changes made to vendor and customers accounts can be
accessed to analyse the changes.[ CITATION Pal06 \l 2057 ].

5. Conclusion
The implementation of ERP systems was not an easy task for Checkpoints System’s
management. It affected the employees in many ways and the effect was reduced by
investing in re-training of employees.

The integration issues for ERP in Checkpoint systems created several issues and they were
overcome by recruiting new staff and by reassigning employees to shared services.

Checkpoint also had to comply with some legal aspects in removing internal errors,
controlling errors in currency fluctuation and preventing fraud and sabotages.

6. Bibliography
Gelinas, U. (2005). Accounting Information Systems "6th Audition" , Ohio: South-Western,
Thompson.

Kafeza, I. (2005). Legal issues in agents for electronic contracting. Proceedings of the 38th
Annual Hawaii International Conference on System Sciences , pp. 134a.
Kendal, K. (2004). Step Sarbanes Oxley Solution. Internal Auditor , pp. 51-55.

Rikhardsson, P. (2006). Sarbanes-Oxley compliance, internal control and ERP systems:

Automation and the case of mySAP ERP. Accounting research group , Page 11.